VTech's Divisional Contract Manufacturing Presentation

1. INNOVATIONBEYONDTECHNOLOGY
1
Sept. 2016
CONTRACT MANUFACTURING DIVISION
Presented by: Rolf Seichter, HTCS, LLC

2. About the VTech Group
2
• Headquartered in HKG since 1976
• Listed in HKG (HKSE:303)
• Factories in HouJie, LiaoBu & QingYuan, R&D Center in SZ
• Operations in 11 countries and regions
Locations
Employees
• 29,500 Employees Worldwide
• 1,500 R&D Professionals & Engineers
Financials
• Financially Strong & Reputation for High Quality
• 3 Divisions : Phones, Electronic Learning Products & CMS
• $1,856.5M in Revenue in Fiscal Year 2016

3. 3
US$M FY12 FY13 FY14 FY15 FY16
Phone 706.3 666.4 626.9 651.5 585.0
ELP 657.1 731.3 778.6 703.3 692.3
CMS 421.1 460.3 493.4 525.0 579.2
FY16 Sales Distribution by Geography
47.3%42.9%
6.9%
2.9%
N. America
Europe
Asia Pacific
Other
1,784
1,858
1,899
1880
1,857
1,500
1,600
1,700
1,800
1,900
2,000
FY12 FY13 FY14 FY15 FY16
Group Turnover in the Past 5 Years, US$M
US$M FY14 FY15 FY16
Sales 1,898.9 1,879.8 1856.5
Operating Profit 226.6 220.1 202.3
Profit Before Tax 228.0 221.7 203.1
R&D Expenses 58.0 56.1 56.3
Cash on Hand 322.9 294.2 273
No. of Employee 30,900 29,500 27,400
Sales by Companies, US$M
Group Financial Highlights
FY16 Group Financial Performance

4. 4
93 95 97
128
158
233 248 261
281
390
421
460
493
525
579
650
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Sales (USD’M)
Actual
Projection
4th 3-Y Plan
3rd 3-Y Plan
2nd 3-Y Plan
1st 3-Y Plan
CMS Annual Sales Trend and Projection
26th
among the world’s top
50 EMS providers in MMI
14th
consecutive year of sales
growth

5. 5
FY16 Major New Product Line Up
Pro Audio Hearable Power Supplies LED Home Appliances
North America
$192.5 million
(33.2%)
Asia Pacific
$52.7 million
(9.1%)
Europe
$334.0 million
(57.7%)
579.2
million
Smart Meter Display Coffee MakerVehicle Battery Charger Calibrated LED LightingUltra Low Noise 96kHz Digital Mixer In-ear Wireless Smart Headphones
Pro Audio
36%
Hearable
20%
Power Supplies
15%
LED
4%
Home Appliance
5%
Industrial
8%
Communications
6%
Medical
5%
Automotive
1%
FY16 CMS Sales Distribution

6. 6
The Strategy
• Growth by Organic with Selective Acquisition
• China Plus One
• Customers Focus
CEO
Support Unit SBU2 SBU3SBU1
CEO
Business Support
Units
SBU2 SBU3SBU1
Business Mission
Be the preferred business partner of
selected customer segment in the EMS
Industry
Core Competence & Competitive Edge
• Core Competence – Stable middle to senior level staffs with good
knowledge in EMS business with skill in serving our customer well.
• Competitive Edges – Niche in manufacturing professional audio
products, strong financial backup by the Group and right size to serve
selected customers segment.
Business Strategy of CMS

7. CMS Manufacturing Capabilities
7
CMS
• 5 buildings with over 85K Sq. M. Manufacturing Area
• SMT, Thru-Hole, RoHS, REACH,
• ISO9001, ISO14001, ISO13485, TS16949, ISO18001, SA8000
• ANSI ESD S20.20 for all production floors
Manufacturing Capabilities
• 24 Fuji SMT Lines, State-of-the-Art Equipment
• In-housed design and fabrication for ICT, AOI, ATE, FAT
• Chip on Board in Class 1,000 Clean Room
• Class 10,000 Clean Room for precise products
• Burn-in Chambers, X-Ray Inspection, Conformal Coating
• Reliability life tests e.g. drop test, high/low temp cycle
Plastics in VTech
• In-House Manufacturing and Tooling for plastics
• 2 Plastic Factories in HouJie and QingYuan
• 2 Automatic Spraying Lines in QingYuan factory
• 400 Plastic Injection Molding Stations, Up to 850 Tons
• Over-Molding Technologies

8. 8
CMS Metal Capability (Acquisition of Kenny Products)
Kenny Products:
• Established in 1979 with 600 Employees, 25,000 Sq. Meter Factory area
• One Stop Service: Tooling Design & Making, Stamping, NC-Punching &
Bending, Secondary Process and Surface Treatment
Stamping Facility:
• 90 sets Press Machines, up to 650 Tons
• 40 sets Stamping Robotic arms
• Stamp Types: Robotic Stamping Lines, Progressive,
Single-Stamping, Transfer and Hydraulic.
NC Facility:
• 4 sets NC-Punching Machines
• 4 sets NC-Bending Machines
• Satisfy High-Mix Low-Volume Orders
Secondary Process – Welding Facility:
•Assembly services catering to functional or appearance
related requirement
•Laser Welding, Stud Welding, Robotic Arc Welding
Machines

9. 9
CMS Metal Capability (Acquisition of Kenny Products)
Surface Treatment Facility:
•Automatic wet painting line & powder coating line in Class 100K
•Silkscreen printing and pad printing workshop
•Facilities fulfill environmental regulations
Quality Management Systems & Quality Control:
• Accredited with ISO9001:2008 and
ISO/TS16949 Certificates by BSI
• CMM
• RoHS Tester
• Hardness Tester
• Salt-Spray Tester
• 3D Vision Projector
• Fisherscope X-ray System
Products Categories:
• Professional Audio Equipment, Home Appliance, Computing Electronics,
Office Automation, Power Supply Units and Automotive Products.

10. 10
Outgoing
Quality
Assurance
System and Process audit
Vendor Rating System &
Improvement Program
Material
planning
(ERP in SAP) &
PO release
Customer
request &
PO review
Manufacturing Process
control
Material
received
Vendors
Quality & Environment System
ISO9001 ISO14001 ANSI/ESD S20.20 TS16949
In-process
Quality
Control
IQC
Outgoing
Quality
Assurance
VTech Tracking System
Identification & Traceability
Product
barcode
system
Material
barcode
system
Customer
ISO13485
Statistical
Techniques
Equipment
Control
Customer
ISO18001
Storage,
Packaging
& Delivery
Production
Inspection & Test
SA8000
Quality Management System

11. Protecting Our Client’s Patents and IP
11
Our Procedures to protect IP
• NDA or General Confidentiality Agreement
• Tightly Controlled Documentation and Copying of Doc’s
• Access on an “As needed Basis”
• Continuous Training of our Employees
• Return of all files after the completion of a Project
History and Forward Looking
The Result
• Our Customers and potential Clients are fully protected
• Our four Buildings as Technology Protection in Projects
• No History of any IP Violation since our Existence
• Ongoing IP & Patent Awareness Training

12. Our sustainability vision is to design, manufacture and supply innovative and high quality
products in a manner that minimizes any impact on the environment, while creating
sustainable value for our stakeholders and the communities.
Sustainability
1) Product Responsibility & Innovation
2) Environmental Protection
3) Workplace Quality
4) Sustainable Operating Practices
5) Community Investment
12

13. R&D Engineering and Design Support
13
R&D Design Services Include
• Product Design, ID Support, Cost-Down Re-design
• Electronics including Hardware & Software Design
• Mechanical, Structural & Assembly Design
• Schematic and PCB Layout Design
• Packaging Design (Gift Box, Clamshell, Export Carton, etc)
Typical Applications and Competence
• HW & SW developments for MCU, MPU, DSP, etc.
• Drivers and Embedded System Applications
• RF, Wireless, Audio, Consumer Electronics, Medical, Health Care,
Telecomm, LED Lighting,
• Prototype, Testing and Agency Approval
Resources
New Product Introduction - NPI
• Design for Manufacturability (DFM)
• Sample Production and Design Verification & Validation
• Selection of Low Cost Components
• Located in Nanshan, Shenzhen
• Professional Audio Test Lab
• CAD & Simulation Software e.g. ProE, Solidworks, FloEFD
• 40 Engineers & Technicians support design professionally

14. 14
Acoustic Room
Listening Room
Accreditation
• South China National Centre of Metrology
Features
• Test Frequency 200Hz-20KHz
• Background noise 28dB or below
• Sound isolation 55dB in average
• Parametric testing
• ISO3745-2003 standard
Accreditation
• South China National Centre of Metrology
Features
• Test Frequency 125Hz-8KHz
• Background noise 28dB or below
• Sound isolation 55dB in average
• Parametric, Functional & Listening testing
• ITU-R BS.11161-1 standard
• VTech R&D Center Audio Test Laboratory with its state-of-art equipments allows audio product testing to be
carried out in house with a shorter turnaround time
Audio Test Laboratory

15. 15
Thank You!